A VA Home Loan is a home loan program accessible specifically to qualified veterans and is guaranteed by the Veterans Administration, also known as the VA. The guaranty provided by the VA was designed to protect the lender from any loss in the event the qualified veteran were to default on their loan. As a result to this beneficial incentive, veterans can purchase their dream house and won’t have to put any money down.
Conventional Loans and VA Home Loans
The qualifications for a VA home loan are a little different from the conventional loan requirements. Conventional loans, unlike VA home loans, aren’t backed by a government guaranty or insurance. Conventional home loan flexibility is a little better if the amount of the loan is higher than the VA home loan limits. However, a conventional loan will usually require a high down payment and majority of VA home loans don’t require a down payment at all. These are just a few examples of why VA home loans are much easier and more favorable.
VA Home Loan Uses
While it will depend on what your lender is capable of doing, the below shows what VA loans are good for:
Purchasing a single family or multifamily home, condo or townhouse
Building a brand new home
Buying and renovating a home that needs some TLC
Upgrading your home with new energy efficient improvements
Refinancing your home (if you have an existing VA home loan)
Purchasing a manufactured home
Buying a mobile home
Buying a home and assuming the existing mortgage.
A VA qualified lender can assist you with any type of loan, but some lenders will not process loans for mobile homes. It’s best to shop around for a lender who can meet your needs.
What to Avoid While Your VA Home Loan is processing:
- Except for minimal use of your credit cards that may be necessary, don’t buy anything on credit. Especially big purchases like a new car, a boat or any other assets.
- Obviously, don’t buy another house.
- Don’t go out spending a bunch of cash on anything, unless you’re paying off some debt. Having that cash in your account could help with your approval and even if you’re not approved for some reason, then that cash could go towards a conventional loan.
- Try to avoid any lawsuits.
- It’s best if you don’t move as well.
- If you already have a mortgage and are trying to refinance, keep paying your monthly bill. Even for other bills or rent, don’t stop paying on those.
Features of a VA home loan
- Assigning your mortgage to other qualified borrowers
- Receive a loan for a manufactured or mobile home
- Buy and renovate a home that needs some TLC
- Build your dream home
- Reuse the VA home loan
Any questions about VA loans or to find out if you qualify for a VA loan, Contact one of our VA home loan experts today!
Justin McHood is America's Mortgage Commentator and has been providing expert mortgage analysis for over 10 years.